Commissioner of Police v McMillan
[2025] NZHC 147
•12 February 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-232
[2025] NZHC 147
UNDER the Criminal Proceeds (Recovery) Act 2009 IN THE MATTER
of an application under ss 17A, 43, 44, 49,
50, 52 and 55
BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
KENNY LESLIE McMILLAN
Respondent
DEAN ANTHONY MORIARTY
First Interested PartyATC GROUP LIMITED
Second Interested party
MANTIS ASSOCIATES LIMITED
Third Interested PartyJITESH MISTRY
Fourth Interested Party
Hearing: 17 October 2024 Appearances:
E M Ferrier and J A Corbett for Applicant K E Hogan for Respondent
K Jeffries for Fourth Interested Party
Judgment:
12 February 2025
JUDGMENT OF BOLDT J
[1] On 13 August 2021, Gwyn J sentenced the respondent, Kenny McMillan, to 18 years’ imprisonment on four charges of supplying methamphetamine and four of
COMMISSIONER OF POLICE v McMILLAN [2025] NZHC 147 [12 February 2025]
possession of methamphetamine for supply.1 He must serve a minimum period of imprisonment of seven years and two months. Mr McMillan’s offending spanned a five-month period between 1 December 2018 and 2 May 2019.
[2] Mr McMillan pleaded guilty to six methamphetamine charges and was convicted at trial of the other two. While he accepted he had been dealing on a significant scale, he rejected the Crown’s estimates of the quantities involved. As a result, Gwyn J examined that question in detail at a disputed facts hearing.2 Justice Gwyn found Mr McMillan had supplied just over 8 kilograms of methamphetamine. There was no dispute the possession for supply charges involved a little more than 2 kilograms. Justice Gwyn found the total quantity of methamphetamine came to 10.37 kilograms.3 On any analysis, Mr McMillan was a very serious offender, involved in large-scale commercial dealing.
[3] The Commissioner of Police (the Commissioner) now seeks orders under the Criminal Proceeds (Recovery) Act 2009 (CPRA).
[4] At the time of his arrest, Mr McMillan had cash reserves (comprising actual cash and funds in bank accounts) of $168,099.81. The Commissioner seeks a type 1 assets forfeiture order (AFO) over those funds. The Commissioner alleges that money was derived from methamphetamine dealing.
[5] The Police have also seized a range of other property, including the proceeds of the sale of a boat and motor vehicles, valuable watches, gold rings, gold coins, a gold necklace, a Ralph Hotere lithograph and cryptocurrency mining equipment. The sale proceeds and other items are the subject of restraining orders. Between them they encompass all Mr McMillan’s property, of any value, the Police were able to locate. In total, including the $168,099.81 sought by way of AFO, the property seized from Mr McMillan is estimated to be worth a little under $340,000.
1 Misuse of Drugs Act 1975, s 6(1)(f) and (2)(a); maximum penalty life imprisonment. Misuse of Drugs Act 1975, s 6(1)(c) and (2)(a); maximum penalty life imprisonment. R v McMillan [2021] NZHC 2118 [Sentencing judgment]. Mr McMillan also received a concurrent sentence of two months’ imprisonment on a charge of failing to assist a person exercising a search power; he refused to supply the passcode to his mobile phone when lawfully required to do so.
2 R v McMillan [2021] NZHC 1993 [Disputed facts judgment].
3 At [67].
[6]Although the property seized from Mr McMillan was only worth around
$340,000, the Commissioner asks me to make a profit forfeiture order (PFO) in the sum of $2.96 million, less the roughly $168,000 in cash he seeks by way of AFO. Mr McMillan sold, or possessed for sale, 10.37 kilograms of methamphetamine. The undisputed evidence is that the market value of methamphetamine at the relevant time was $8,000 per ounce. The Commissioner calculates the total value of Mr McMillan’s unlawful benefit at $2.96 million (370 ounces, multiplied by $8,000 per ounce). Assuming the cash seized from Mr McMillan is the subject of an AFO, the Commissioner seeks a PFO of around $2.79 million.
[7] In converting kilograms to ounces the Commissioner has rounded up rather too enthusiastically. 10.37 kilograms is 365.791 ounces, not 370, representing a total benefit of $2.926 million, rather than the $2.96 million the Commissioner seeks. Nonetheless, it is still an extremely large sum of money.
[8] Having provided that background, I propose to use round figures in this judgment. Only at the end, when I make my orders, will I worry about being mathematically exact.
[9] Mr McMillan accepts an AFO and PFO should be made. He concedes most of the cash and assets seized from him should be forfeited. That said, he argues that
$50,000 should be excluded. Mr McMillan supports the application for third party relief by an associate of his named Jitesh Mistry. Mr Mistry alleges he advanced
$50,000 to Mr McMillan as a loan, in good faith and without any knowledge of Mr McMillan’s offending.
[10] In addition, Mr McMillan contests the size of the PFO. He says there is no evidence he received sums in excess of $2.9 million during the five months covered by the charges. Mr McMillan submits a massive order, of the kind the Commissioner seeks, would be a pointless and oppressive gesture. He has already consented to the forfeiture of all his known assets. He submits he should not face a lifelong residual debt of $2.6 million, which is roughly the size of the PFO the Commissioner seeks, less the value of the cash and assets the Police have seized.
Background
The offending
[11] At sentencing, Gwyn J provided a succinct summary of Mr McMillan’s offending which I gratefully adopt:4
[4] All … charges result from two police investigations into an operation that supplied methamphetamine in the Auckland and Wellington regions — Operation Superdry in relation to Wellington-based offending, and Operation Maddale in relation to Auckland-based offending. [Mr McMillan was] the main individual targeted in the Wellington-based offending. Mr James was the principal Auckland-based individual targeted by Operation Maddale and was [Mr McMillan’s] primary supplier.
[5] Following a disputed facts hearing, I found the eight methamphetamine charges involved a total of 10.37 kilograms of methamphetamine. These charges can be broken down into three categories: the Auckland transportation phase, the carpark building phase, and the termination phase.
Auckland transportation phase
[6] Two of the charges arise from the Auckland transportation phase — offending that occurred between December 2018 and March 2019, when [Mr McMillan] arranged for the transportation of bulk quantities of methamphetamine to Wellington from Mr James in Auckland.
[7] In March 2019, [Mr McMillan’s] co-defendants, Mr Philip, Ms Hayman and Mr Minns transported a shipment of two kilograms of methamphetamine from Mr James in Auckland to [Mr McMillan] in Wellington. The methamphetamine was concealed within a hidden compartment in a purpose-modified Nissan Tiida, and Mr Minns then started to drive it back to Wellington. He was stopped by Police along the way, and the car was impounded in Taupō for an unrelated driving offence. The methamphetamine was subsequently discovered by Police on 15 March 2019. This gave rise to a charge of possession for supply.
[8] [Mr McMillan was] also charged with a representative charge of supplying methamphetamine during this period, of methamphetamine supplied after [Mr McMillan] had purchased it from Mr James by way of directing [Mr McMillan’s] co-defendants to make similar trips from Auckland to Wellington in purpose-modified cars, the Nissan Tiida and a Mitsubishi Lancer. I found [Mr McMillan] directed seven other similar trips between 1 December 2018 and 9 March 2019, resulting in [Mr McMillan] purchasing and then supplying a total of seven kilograms of methamphetamine.
The carpark building phase
[9] Five of the charges (three of supply, and two of possession for supply) arise from the carpark building phase. This is offending that occurred between
4 Sentencing judgment, above n 1. Footnotes omitted.
March and May 2019, when [Mr McMillan] exchanged methamphetamine for cash, primarily with [his] co-defendant Mr Taui, in carpark buildings in Wellington (some of this was sourced from Mr James, and some was sourced from Mr O). Following a disputed facts hearing, I found [Mr McMillan] in possession for supply, or supplied, a total of 1.352 kilograms of methamphetamine during this period.
Termination phase
[10] One charge of possession for supply arises from the termination phase of Operation Superdry — when executing search warrants on 2 May 2019, Police found [Mr McMillan] in possession of 18 grams of methamphetamine.
[12] The facts underlying the possession for supply charges were not discussed in detail in Gwyn J’s sentencing remarks, or in her disputed facts judgment. The quantities of methamphetamine involved in those charges were largely agreed by the time of the disputed facts hearing, so Gwyn J had no need to dwell on them. That said, in light of the submissions Ms Hogan advanced on behalf of Mr McMillan, the circumstances of the possession for supply charges are relevant to the current application.
[13] Ms Hogan approached her submissions on the assumption that 2.206 kilograms of methamphetamine were found in Mr McMillan’s possession upon arrest. In fact, with the exception of 18 grams found when Mr McMillan was arrested, the possession for supply charges did not arise from drugs which remained unsold when the Police operation terminated. Rather, the drugs were observed in Mr McMillan’s or his associates’ possession in the course of the dealing operation.
[14] For example, as Gwyn J observed, Police found 2 kilograms of methamphetamine concealed in the modified Nissan Tiida when it was stopped and briefly impounded on its way from Auckland to Wellington in March 2019. Having quietly observed and documented the presence of the drugs in the vehicle, the Police allowed Mr McMillan’s associates to go on their way. There was no direct evidence the methamphetamine was later sold, but that was plainly the intention. Similarly, two of the other possession for supply charges arose when Police inspected packages of methamphetamine Mr McMillan left for collection in a hiding place in the carpark building.5
5 The carpark building possession for supply charges were charges 1 and 4. In the case of charge 1, Mr Taui left a package containing 160 grams of methamphetamine in a hiding place he and
[15] In effect, three of the four possession for supply charges, which between them accounted for 2.188 kilograms of methamphetamine, represented snapshots of Mr McMillan’s dealing operation in action.
Procedural history
[16] On 1 May 2019, the day before Mr McMillan’s arrest, Simon France J made a broad without notice restraining order over Mr McMillan’s property. It specified four motor vehicles — a Mercedes-Benz, a BMW, an Audi and a Porsche — a then- unidentified boat and “all cash (including any bank accounts …), jewellery, art, motor vehicles and any luxury items over $1,000 in value …”.
[17] As required by s 39(2) of CPRA, the Commissioner brought a further restraining order application, this time on notice, within seven days of the without notice order. The on-notice application included a schedule of items identified after Mr McMillan was arrested, including watches, rings and a gold necklace. The Commissioner sought to restrain only two of the original four vehicles — the Audi and the BMW.
[18] The on-notice application was granted by Churchman J on 6 August 2019. The previously unidentified boat was a Silverton 330 Sport Launch, which Churchman J restrained alongside the cars and the other property. At the same time, Churchman J directed the vehicles and the boat should be sold, and the proceeds transferred to the Official Assignee. Between them, the vehicles and the boat realised just over $60,000.
[19] Later, more property came to light, including $95,300 in cash, a gold medallion and another ring. Justice Gendall made a further restraining order on 1 April 2022.
Mr McMillan used. Mr McMillan picked it up and took it away, before returning it to the same spot a few hours later. Charge 4 arose when Police observed Mr McMillan hiding an envelope. When inspected it was found to contain 28 grams of methamphetamine.
The interested parties
[20] Some of the property in the Commissioner’s application is in the name of third parties, though the Commissioner has led evidence which shows it to have been under Mr McMillan’s effective control.
[21] Mr Moriarty, the first interested party, was the registered owner of the Audi before its sale. He has been served with these proceedings but did not enter an appearance. The Police observed the Audi being driven on 15 occasions during the four and a half weeks they had the carpark building under observation. On all but one of those occasions, Mr McMillan was driving. In 2020, prior to the disputed facts hearing, Mr Moriarty made an affidavit confirming he was the registered owner of the Audi. He said Mr McMillan “used this Black Audi from time to time”, but provided no additional detail. Mr Moriarty has not responded to the present application for forfeiture. After fees and storage costs were deducted, the proceeds of the sale of the Audi came to $19,370.78. Mr Moriarty has not asserted any interest in that money.
[22] ATC Group Limited (ATC), the second interested party, is a now-deregistered company which was incorporated on 5 December 2017. It has a registered interest in the BMW. Mr McMillan was its sole shareholder. The Companies Register says ATC provided “business consultant” services, but during its existence it appeared to conduct little, if any, business. In any event, ATC was Mr McMillan’s company. It has taken no steps to assert any independent interest in the BMW.
[23] Mantis Associates Limited (Mantis), the third interested party, was a company incorporated on 15 January 2019, around four and a half months before Mr McMillan’s arrest. Mr McMillan was the sole director, and its sole shareholder was ATC. It was classified as a “marketing consultancy service” on the Companies Register, and the business description listed in the IRD records suggests it was set up to operate a massage parlour. It never became fully established as a functioning business and is now deregistered. The Commissioner seeks forfeiture of the $2,295.69 (plus accrued interest) in Mantis Associates’ bank account. Once again, it is clear Mantis, and its bank account, were under Mr McMillan’s control. Mantis has not taken any steps in
this proceeding and does not oppose the Commissioner's application for forfeiture of its funds.
[24] Mr Mistry, the fourth interested party, is a self-employed travel broker. He gave evidence he had been arranging travel for Mr McMillan since 2014, when Mr McMillan visited his travel agency to book an overseas trip. Mr Mistry said he and Mr McMillan shared an interest in cars, and that one day Mr McMillan mentioned he was planning to import damaged cars from Australia to repair and sell. Mr Mistry said this appeared an attractive investment opportunity, and that as a result he lent Mr McMillan $50,000. There is no doubt that on 14 March 2019 Mr Mistry transferred $50,000 to Mr McMillan, and he has produced a document, which purports to be a loan agreement dated 11 March 2019, in support. I will discuss this document in more detail below, but for present purposes it is sufficient to note that the document recorded an interest rate of one per cent and said that “both interest and principal shall be repayable on demand”.
[25] Mr Mistry has applied for an order excluding $50,000 (plus interest) from the AFO. Mr Mistry says that money belongs to him, and that he had no idea Mr McMillan was involved in commercial-scale methamphetamine dealing when he advanced the funds.
Relevant legal principles
[26] CPRA establishes a regime for the forfeiture of property acquired or derived, directly or indirectly, from significant criminal activity, or property that represents the value of a person’s unlawfully derived income.6 It seeks to “eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity”.7
6 Section 3(1).
7 Section 3(2).
[27]Section 6 relevantly provides:
6 Meaning of significant criminal activity
(1)In this Act, unless the context otherwise requires, significant criminal activity means an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending—
(a) that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or
(b) from which property, proceeds, or benefits of a value of the threshold amount or more have, directly or indirectly, been acquired or derived.
…
(3) Any expenses or outgoings used in connection with an activity of the kind described in subsection (1) must be disregarded for the purposes of calculating the value of any property, proceeds, or benefits under subsection (1)(b).
[28] Mr McMillan was convicted of eight charges with a maximum penalty of life imprisonment; there is no doubt CPRA applies.
Type 1 Assets Forfeiture Orders
[29] Under s 50(1) of CPRA, the Court must make an AFO if satisfied, on the balance of probabilities, that specific property is “tainted property”.
[30]Tainted property is defined under s 5:
tainted property—
(a)means any property that has, wholly or in part, been—
(i)acquired as a result of significant criminal activity; or
(ii)directly or indirectly derived from significant criminal activity; and
(b)includes any property that has been acquired as a result of, or directly or indirectly derived from, more than 1 activity if at least 1 of those activities is a significant criminal activity.
[31] “Property” has a wide definition, and includes a legal or equitable estate or interest in property or a right, power of privilege in connection with the property.8 Property is presumed tainted if the Commissioner serves the respondent with an order requiring him or her to disclose its source. The respondent must then show, on the balance of probabilities, that it is not tainted.9
[32] The regime is strict and designed to allow only limited judicial discretion. Nonetheless, under s 51 the Court may exclude certain property from an AFO if it considers, having regard to all the circumstances, that “undue hardship is reasonably likely to be caused to the respondent if the property is included in the [AFO]”.
Profit Forfeiture Orders
[33] A PFO does not require an identified connection between the respondent’s property and the unlawful criminal activity. Rather, a PFO is fixed with reference to the “unlawful benefit” the respondent has derived.10 A PFO seeks to strip the respondent of property of an equivalent value, regardless of when the property was acquired or how it was derived.
[34] Section 55 of CPRA governs PFOs. That section provides the Court must make an order if satisfied on the balance of probabilities that the respondent has unlawfully benefited from significant criminal activity and “has interests in property”.11
[35] A respondent has “unlawfully benefited from significant criminal activity” if he or she has “knowingly directly or indirectly derived a benefit from significant criminal activity (whether or not that person undertook, or was involved in, that activity).”12 In other words, there is no need for the respondent to participate in the underlying criminal activity. It is enough if the respondent knows the benefit was derived from significant criminal activity. Wilful blindness is sufficient.13
8 Section 5(1).
9 Section 50(2A).
10 Section 55(1)(a).
11 The significant criminal activity must have occurred within seven years of the date the Commissioner applied for the relevant restraining order (if property is restrained) or within seven years of the date of the PFO itself (if the application does not concern restrained property).
12 Section 7.
13 Commissioner of Police v Irwin [2020] NZHC 1370 at [48]–[49].
[36] Section 53(1) provides that the value of the unlawful benefit is presumed to be the value stated in the forfeiture application as long as the Commissioner proves, on the balance of probabilities, that the respondent has derived some unlawful benefit from significant criminal activity.
[37] Under s 53(2) the respondent is entitled to rebut that presumption on the balance of probabilities. If the respondent fails to do so, the Court is required to adopt the sum the Commissioner selects.14 As the Court of Appeal observed in Commissioner of Police v Cheah, an application under s 53 permits only two possible outcomes:15
[47] …The first is that the Commissioner enjoys the benefit of the presumption and the respondent fails to rebut the presumption. In that case the presumed value stands. The second is where the respondent succeeds in rebutting the presumption. As for the latter, by necessary construction, it follows that the respondent must prove a different value. Under s 53 the Court’s role is limited to deciding on the balance of probabilities whether the Commissioner has proved that the respondent unlawfully benefitted, during the relevant period of criminal activity, from significant criminal activity, and whether the respondent has rebutted the presumption that the value of that benefit is correctly stated in the application.
[38] The maximum sum that may be recovered under a PFO is the value of the unlawful benefit, as determined under s 53, less the value of any property forfeited to the Crown under an AFO.16 That said, as in the case of AFOs, there is little room for judicial discretion.
[39] The courts have shown little sympathy towards respondents who assert, without seeking to tender evidence, that the sums nominated by the Commissioner are excessive. In its recent decision in Commissioner of Police v Akavi, the Court of Appeal overturned a decision of the High Court where the Judge did not consider the evidence supported the sum the Commissioner nominated. Instead the Judge made a PFO he considered a more accurate reflection of the benefit the evidence disclosed.17 The Court observed that once the unlawful benefit has been calculated in accordance with s 53, and the value of any AFO has been deducted under s 54:
14 Commissioner of Police v Akavi [2024] NZCA 367 at [24].
15 Cheah v Commissioner of Police [2020] NZCA 253.
16 CPRA, s 54.
17 Akavi, above n 14 at [29].
[27] …Section 55 then applies. It is prescriptive. The court does not have a discretion. At that stage, the court must make a profit forfeiture order in the sum fixed as above, provided it is satisfied, on the balance of probabilities, that the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity, and that the respondent has interests in property.
[28] We agree with the submission for the Commissioner that any practical difficulties as to there not being sufficient assets to meet the profit forfeiture order are accounted for by the scheme of the Act through the requirement of s 55(2)(c) to specify the property to be disposed of in accordance with s 83(1). Section 55(4) contemplates the value of the benefit, and the maximum recoverable amount may exceed the property identified in s 55(2)(c). The shortfall is a debt to the Crown which may be enforced by the Official Assignee.
[40]Nonetheless, CPRA contains some safeguards. As Cooke J observed in
Commissioner of Police v Cheng:18
[52] The ability of the respondent to prove some other benefit gives protection against the application going beyond a reasonable calculation of the benefit obtained by a respondent by the offending. In addition the fact that the Commissioner is required to prove, on the balance of probabilities, that the respondent has unlawfully benefitted is a significant evidential hurdle. Moreover as Ellis J said in Commissioner of Police v Keen, the Commissioner is not permitted to choose a random figure in the application as this would be an arbitrary and wrongful exercise of statutory power. The Court has the power under s 47 to amend the application for a civil forfeiture order, and “whether the Court then deals with the matter by amending the application under s 47 (as suggested by the Court in Cheah) or by making its own assessment based on the evidence as a whole, will depend on the circumstances of the case”. I agree that these are important safeguards against executive overreach.
[41] It is apparent that the Court’s power to amend the application under s 47 and adopt the newly-amended sum must be exercised sparingly and only in unusual circumstances. That said, it would be an unremarkable exercise of s 47 to apply it where the Commissioner seeks an award based on a mathematical error, as he does in this case. I propose to apply s 47 to reduce the sum the Commissioner seeks so it aligns with the correct conversion of kilograms into ounces; doing so will reduce the size of the order by around $35,000.
[42] Recourse to s 47 may also be appropriate in a clear case of overreach, where the sum in the application is both arbitrary and wholly untethered from any reasonable
18 Commissioner of Police v Cheng [2023] NZHC 606. Internal citations omitted.
assessment of the benefit the respondent derived. But in general, a respondent who wishes to resist an apparently-excessive PFO must tender evidence of the actual benefit he or she derived, however difficult or uncomfortable that exercise may be.
Effective control orders
[43] Section 17A of the CPRA allows the Court to disregard the legal ownership of property if satisfied the respondent “has effective control” over it. In doing so, the Court is invited to consider whether the respondent is the true owner of the property, regardless of legal title. The Court, in considering an effective control order, may consider “the practical reality of ownership, rather than being limited by legal forms
… The fundamental question is whether, in fact, the respondent has the capacity to control, use, dispose of, or otherwise treat the property as their own”.19
This case
[44] Given the scheme of the Act, the Commissioner’s applications largely resolve themselves. Mr McMillan was a leading figure in a commercial-scale methamphetamine dealing operation, and he accumulated a considerable body of assets in doing so. He had no legitimate source of income. IRD records show declared income of $50,400.30 in the seven years from 31 March 2013 to 31 March 2020.
[45] It follows there is no doubt the Commissioner has proved Mr McMillan derived an unlawful benefit from his offending, and that the property which was seized from him at the time of his arrest was acquired or derived from significant criminal activity.
[46] As a result, and subject to Mr Mistry’s unusual application for third-party relief, there is no dispute the money seized from Mr McMillan following his arrest is tainted. While Ms Hogan supports Mr Mistry’s claim to the $50,000 he transferred to Mr McMillan, she accepts the remainder should be forfeited.
[47] Two aspects of the Commissioner’s application remain in dispute. First, Mr Mistry seeks relief from forfeiture of the $50,000 (plus interest at one per cent per
19 Commissioner of Police v Read [2015] NZHC 2055 at [60]; Commissioner of Police v Jiang
[2020] NZHC 695, [2021] 2 NZLR 272 at [43].
annum) he transferred to Mr McMillan shortly before the latter’s arrest. Mr Jeffries, for Mr Mistry, criticises the fact the Commissioner did not serve Mr Mistry until August 2024, though I do not consider anything turns on that.
[48] Mr Jeffries argues the $50,000 transfer on 14 March 2019 was a loan (or perhaps an investment — the evidence shifted as the hearing unfolded). He says the funds were advanced in good faith and that Mr Mistry simply wished to provide capital for Mr McMillan to import cars from Australia. Mr Jeffries says that although the loan document is not sophisticated, it is nonetheless legitimate. The Commissioner has not suggested Mr Mistry was involved in any organised criminal activity.20
[49] The second area of dispute concerns the size of the PFO. The Commissioner’s application asserts Mr McMillan derived an unlawful benefit of $2.96 million (or, correcting his faulty conversion from kilograms to ounces, a little over $2.92 million). Assuming an AFO of $168,099.81, the Commissioner seeks a final PFO of slightly over $2.75 million. Mr McMillan argues the PFO should be limited to the remainder of the property seized from him, which collectively accounts for everything he owned.
[50] Ms Hogan resisted the larger order on two bases. First, while Gwyn J found, following the disputed facts hearing, that the eight methamphetamine charges involved a total of 10.37 kilograms of the drug, the selling charges accounted for only
8.164 kilograms. Ms Hogan submitted the other 2.206 kilograms remained unsold, and therefore did not give rise to any actual benefit. As noted above, with respect to all but 18 grams, the evidence does not reveal whether the 2.206 kilograms were sold or not. Police observed those drugs in the possession of Mr McMillan or his associates between one and six weeks prior to his arrest, and there is no doubt he had both the time, and the inclination, to sell them.
[51] Ms Ferrier, on behalf of the Commissioner, argued the presumption in s 53(1) resolves the question. The value of the 2.206 kilograms was included in the sum specified in the Commissioner’s application. If Mr McMillan wishes to say he derived
20 Mr Jeffries and Ms Hogan object to evidence contained in an affidavit tendered by Detective Buckley, on behalf of the Commissioner, which outlines Mr Mistry’s (insignificant) criminal history. They say that evidence is irrelevant and accordingly inadmissible. I agree that evidence is irrelevant and have ignored it.
no benefit from those drugs, it is incumbent upon him to call evidence explaining what became of them.
[52] A number of High Court decisions have held that receipt of drugs, in itself, will amount to an unlawful benefit. For example, in Commissioner of Police v Murray, Gendall J considered an application for a PFO in the case of a drug courier, who was found in possession for supply of 500 grams of methamphetamine.21 The Commissioner sought a PFO in the sum of $479,000, which was the agreed estimate of the value of the methamphetamine at the time.22 Mr Murray contended he was a mere courier. He said the drugs were not his, he had not sold them, and he had received no financial benefit for transporting them. In rejecting that submission, Gendall J observed:
[29]…[d]espite Mr Murray’s contention first, that he was simply the courier of these drugs transporting them from Auckland to Christchurch and nothing more, and secondly, that he received nothing nor any benefit for his troubles the fact remains that ... Mr Murray clearly had charge of the drugs when he was stopped in Taupo and he “always had the chance to profit from his criminal activity” because he always had the ability to keep or deal in these drugs for his own benefit.
[53] Justice Gendall relied heavily on Lang J’s decision in Pulman v Commissioner of Police.23 Justice Lang referred to CPRA’s purpose statement.24 Section 3(2) provides that, among other things, the Act seeks to “eliminate the chance for persons to profit from undertaking or being associated with significant criminal activity” and to “deter significant criminal activity.” That said, Pulman was a case in which the respondent derived a clear financial benefit.25 Mr Pulman worked at a pharmacy where he sold 1,290 packets of pseudoephedrine-based products for $100 each, knowing they would be used in the manufacture of methamphetamine.26 He alleged he kept none of the money, putting it in a cash box his employers used to pay staff wages and meet other outgoings. The fact he did not retain the money was irrelevant; the funds he received were clearly derived from significant criminal activity. Lang J
21 Commissioner of Police v Murray [2016] NZHC 2699.
22 At [22].
23 Pulman v Commissioner of Police HC Auckland CIV-2010-404-5666, 27 May 2011.
24 At [23] and [25]–[28].
25 At [26].
26 At [4]–[6].
observed the Act applies “even in circumstances where the offender ultimately derives no personal benefit from his or her criminal activity”.27
[54] Ms Hogan also opposes the $2.75 million PFO simply because of its size. A PFO of that magnitude will leave Mr McMillan with a residual debt of around
$2.6 million when he leaves prison. Having seized all his identifiable assets, Ms Hogan submits a PFO that so massively exceeds any sum Mr McMillan could ever hope to pay would be pointless and oppressive. The sum was calculated on the assumption Mr McMillan would sell, or had sold, the full 10.37 kilograms of methamphetamine, at street value, and had personally received the entire amount.
[55] The reality, Ms Hogan submits, is that Mr McMillan was part of a supply chain. While he plainly profited handsomely, there is no evidence his benefit was anything like the $2.9 million the Commissioner seeks. In cross-examination, Detective Buckley characterised Mr McMillan as “more in the wholesale category”. He was on-selling large amounts of methamphetamine to others, while their role was to distribute the drugs further. Ms Hogan drew particular attention to Mr McMillan’s associate Mr Taui, who received large quantities of methamphetamine from Mr McMillan. In 2024, the Court made a $1.3 million PFO against Mr Taui, based on his having handled some of the same drugs for which a PFO is now sought against Mr McMillan.28
[56] Ms Hogan submitted the PFO the Commissioner seeks is so large it will be meaningless, either as a deterrent or in terms of stripping Mr McMillan of ill-gotten gains. Indeed, she submitted the fact Mr McMillan will leave prison with a debt of that magnitude is likely to be counter-productive. The prospect of the Commissioner seeking to disgorge any money Mr McMillan might earn after his release will operate as an active disincentive to his rehabilitation. If legitimately sourced income is likely to be lost to the Crown, Mr McMillan will be far less likely to seek a normal and productive job when he returns to the community. Ms Hogan submitted the creation of a fresh judgment debt of around $2.6 million, in circumstances where all
27 At [28].
28 Commissioner, New Zealand Police v Taui [2024] NZHC 488 at [27].
Mr McMillan’s known assets have been confiscated, will represent a crushing and disproportionate additional punishment.
[57] Ms Ferrier submitted the question is straightforward. The Commissioner, in his application, has assessed Mr McMillan’s unlawful benefit at more than
$2.9 million. By virtue of s 53, the Court is obliged to adopt that sum unless Mr McMillan tenders evidence which shows his benefit was smaller. He has made no effort to do so. It follows, assuming the seized assets and cash are the subject of an AFO, that the Commissioner is entitled to a PFO of more than $2.7 million, despite Mr McMillan’s remaining assets being worth only around $170,000.
[58] Ms Ferrier rejected Ms Hogan’s characterisation of the PFO as excessive and made the obvious point that if the sum the Commissioner seeks is so divorced from the benefit Mr McMillan really derived, it was open to him to tender evidence saying so.
[59] Ms Ferrier acknowledged that all Mr McMillan’s known assets are captured by the AFO application, but argued that limiting recovery to property the Police can locate would incentivise concealment. In the absence of evidence from Mr McMillan which quantifies his actual benefits, a large PFO will ensure any additional assets that later emerge will be captured.
[60] Ms Ferrier noted that by the time Mr McMillan is released from prison, the Court’s leave will be required before the Official Assignee can take any further enforcement action.29 She submitted the Court would be unlikely to give leave if the Official Assignee sought to recover Mr McMillan’s lawful income after his release. The point of the order is to capture any concealed assets, not to pursue lawful post- release income.
[61] Ms Ferrier observed that very large PFOs are common. Responsibility for orders of that magnitude rests with the respective respondents, who are disinclined to contest the sums the Commissioner nominates.
29 High Court Rules 2016, r 17.9(2)(b). That rule provides that if six years have elapsed since the date of the judgment, the Court’s leave is required to issue an enforcement process.
Discussion
The AFO and Mr Mistry’s claim for relief
[62] Only one aspect of the Commissioner’s AFO application is in dispute. The Commissioner firmly rejects Mr Mistry’s application for third party relief. There is otherwise no dispute the funds seized following Mr McMillan’s arrest should be forfeited.
[63]Mr Mistry seeks relief under sections 61 and 66. They provide:
61 Person (other than respondent) may apply for relief before civil forfeiture order made or declined
At any time after an application for a civil forfeiture order has been made and before the civil forfeiture order is made or declined, a person (other than the respondent) who claims an interest in the property sought to be forfeited under a civil forfeiture order may apply for an order for relief.
66 Making order for relief from civil forfeiture order where person has interest and was not involved in significant criminal activity
(1) On receipt of an application for an order for relief from a civil forfeiture order under section 61 or 62, the High Court must grant the relief that the Court considers appropriate if the applicant proves on the balance of probabilities that the applicant—
(a)has an interest, or would but for any civil forfeiture order have an interest, in the property to which the application relates; and
(b)has not unlawfully benefited from the following significant criminal activity:
…
(ii) …the significant criminal activity to which the civil forfeiture order or proposed civil forfeiture order relates.
[64] There is no doubt Mr Mistry transferred $50,000 to Mr McMillan on 14 March 2019. It also appears both men signed a document purporting to be a loan agreement dated 11 March 2019. On its face it provides that the loan was for an indefinite period, at one per cent per annum, and that both principal and interest were repayable on demand. The recital lists Mr McMillan as “Kenny Leslie McMillan,
Businessman of Wellington”. Mr McMillan acknowledged “disclosure in terms of the Credit Contracts and Consumer Finance Act 2017”.30
[65] Aside from the bare fact of the $50,000 transfer, the Commissioner rejects every aspect of Mr Mistry’s application for relief. Mr Mistry swore an affidavit which sought to explain the transaction. While Ms Hogan supported Mr Mistry’s application, Mr McMillan did not swear an affidavit of his own.
[66] Mr Mistry was extensively cross-examined. Having observed his evidence, I have no hesitation in rejecting his account. I do not accept his explanation for the
$50,000 transfer, nor do I accept the “loan agreement” appended to his affidavit was a genuine document.
[67] The starting point is the sheer implausibility of the transaction. In his affidavit Mr Mistry said he first met Mr McMillan in 2014 when Mr McMillan approached him to book some travel. In evidence he accepted he had known Mr McMillan for 20 years. Mr Mistry said they had met through the local “car scene” in the late 1990s or early 2000s. During that 20-year period, Mr McMillan had been imprisoned for six and a half years for methamphetamine dealing.31
[68] Mr Mistry said he had been “an entrepreneur all [his] life” and that he had been in business for 30 years. He said he had invested in many car companies and startups and that when he heard about Mr McMillan’s plan to import damaged cars from Australia he thought it was “quite a good opportunity”.
[69] Notably, the transfer did not purport to be an investment in Mr McMillan’s car importation scheme. Rather, the document described it as a loan, at one per cent per annum, at a time when Mr Mistry could have received a better, and far safer, return by putting his money in the bank. He said there were no other records documenting the loan, nor any other documents explaining the business relationship between Mr McMillan and him. In evidence Mr Mistry referred, vaguely, to some form of
30 There is no such Act. The Act referred to in the agreement appears to be a combination of the Credit Contracts and Consumer Finance Act 2003 and the Contract and Commercial Law Act 2017.
31 Mr McMillan was sentenced in 2008.
profit-sharing agreement,32 but could not produce any documents or other material supporting such an arrangement, nor could he explain why, if that was the intention, the only document the men drew up recorded an unsecured loan at one percent.
[70] Extraordinarily, Mr Mistry said he did not even know where Mr McMillan lived, and claimed he knew little about him. He acknowledged that if Mr McMillan had disappeared with the money, he would not have known where to start looking. When asked how many other customers he had lent $50,000 to, he said (rather unconvincingly) “none, that I can recall right now”. I do not accept an experienced and competent businessman would be so reckless with such a substantial sum.
[71] Mr Mistry said he made no attempt to demand repayment following Mr Mistry’s arrest, nor did he try to recover his funds any other way. Indeed, he did not seek repayment until 8 March 2024. At the time Mr McMillan was arrested, Mr Mistry held funds on Mr McMillan’s behalf (for proposed travel, which had to be cancelled). Despite realising Mr McMillan now represented a very poor risk, he refunded $4,699 to Mr McMillan’s partner without seeking to deduct that sum from the outstanding debt. When asked why he had not tried to recover his money when he learned Mr McMillan had been arrested on drugs charges, he replied “I’m not too sure why not at that time”.
[72] When Ms Ferrier suggested the true purpose of the transfer was to finance Mr McMillan’s methamphetamine operation, Mr Mistry replied “sorry, what are you trying to say, sorry, I’m a little bit stumped here”. When she tried again, he replied “why are you asking me…”. His denial, when it came, could hardly be described as emphatic. After I directed him to answer the question, he replied “yeah, yeah, but no”.
[73] I reject Mr Mistry’s explanation for the $50,000 transfer and I decline to accept any part of his evidence apart from the fact the funds were transferred. Whatever the real purpose of the transfer, I am satisfied it had nothing to do with the importation of damaged cars. It is also clear the true explanation is not one either Mr Mistry or
32 For example, Mr Mistry said “I think we discussed that, you know, after some cars were sold or whatever business that we did, that we would pay off the initial $50,000 loan, and then we would share in the profits.”
Mr McMillan wishes to disclose. Mr Mistry’s evasiveness when accused of financing Mr McMillan’s dealing operation was telling. I do not accept the “loan agreement” was a genuine document, or that it accurately described the nature of the transaction.
[74] It follows Mr Mistry has not persuaded me the $50,000 transfer represented a loan, as opposed, for example, to repayment of an existing debt or a knowing investment in an unlawful operation. Mr Mistry has not persuaded me he retained an ongoing interest, either legal or equitable, in the funds.
[75] Section 66(1) provides that if a third party meets the requirements of paras (a) and (b), “the High Court must grant the relief the Court considers appropriate”. I do not consider Mr Mistry has proved he has a continuing interest in the $50,000 he transferred to Mr McMillan, but even if the evidence showed the transfer could properly be characterised as a loan, in the wider circumstances of the case I would not have considered any relief appropriate.
[76] It follows I make the AFO the Commissioner seeks. I decline Mr Mistry’s application for third party relief.
The PFO
[77] I have some sympathy for Ms Hogan’s concern about the sheer scale of the PFO the Commissioner seeks. It is of course possible Mr McMillan holds assets the Police have yet to locate. He had placed some of his known assets in the hands of third parties and it is possible other funds were transferred into asset classes, such as cryptocurrency, that can be difficult to trace.33 Nonetheless, I agree it appears highly unlikely Mr McMillan received, and somehow concealed, more than $2.9 million over the relatively short period covered by the charges.
[78] But those observations do not help when fixing the level of the PFO. The sum the Commissioner has nominated is only an opening gambit. While the Commissioner may not choose an arbitrary or random sum, CPRA does not require him to have an unshakeable evidential foundation for the sum he selects.
33 The items forfeited under the AFO included equipment designed to assist in the mining of Ethereum, which is the second most popular cryptocurrency after Bitcoin.
[79] I do not accept Ms Hogan’s submission that s 53(1) entrusts the Commissioner with a powerful executive authority that requires careful oversight. The sum selected by the Commissioner is presumptive, not determinative. Rather, the Act recognises and reflects an obvious reality — the most accurate and detailed information about the size and nature of unlawfully-derived benefits lies with the offenders themselves. The Commissioner can do no more than make an educated guess based on the information Police can find. That picture will frequently be incomplete. Offenders, especially those involved in sophisticated commercial-scale offending, often adopt sophisticated mechanisms to launder and conceal the proceeds of their offending.
[80] CPRA addresses the resulting information imbalance by ensuring respondents cannot criticise the sum the Commissioner chooses without explaining exactly what benefits they did derive. That is plainly an uncomfortable exercise for many, who understandably prefer not to talk about their offending in detail. But offenders who decide to remain silent cannot complain if the Commissioner overestimates their benefit. At the same time, the Commissioner is at risk of a costs award if the respondent proves the value nominated in the application was excessive, particularly if the respondent shows it massively exceeds the true figure.
[81] Ms Hogan submits that possession for supply charges, by definition, do not generate an unlawful benefit. I do not accept that proposition; every case must be determined on its own facts. In some cases, temporary possession of unsold drugs may yield nothing of value. For example, and with respect to Gendall J’s reasoning in Murray, I doubt a mere courier, caught in transit, can be said to have derived a benefit equivalent to the full value of the drugs.34 Temporary custody is not a benefit (though a sum of money or quantity of drugs received by way of reward would be). The suggestion couriers “always [have] the chance to profit”, presumably by converting their cargo to their own use, is no more convincing in the case of a drug courier than it would be in the case of any other person who moves packages for a living.35
34 Commissioner of Police v Murray, above n 21.
35 That said, if there is doubt about the true ownership of the drugs, the courier may be obliged to give evidence explaining the arrangement, including the actual benefit he or she derived.
[82] On the other hand, there will plainly be cases where possession for supply does allow the Court to infer an unlawful benefit. This case provides a clear example. Three of the four possession charges arose when Police observed packages of methamphetamine making their way along the supply chain. While there was no direct evidence they were later sold, it is unclear what else might have become of them. And if Mr McMillan did not derive a benefit from their sale, or the same drugs were later reflected in the supply charges, it is reasonable to expect him to say so.
[83] The $2.9 million the Commissioner selected represented the market value of the drugs Mr McMillan sold, were temporarily in his possession, or were on their way to him. It disregards his expenses and outgoings, as CPRA requires. In emphasising Mr McMillan’s role as part of a supply chain, and the fact he inevitably had to pay for the drugs he received and on-sold, Ms Hogan’s submission overlooks the effect of s 6(3).36 Nonetheless, if the application wildly overestimates Mr McMillan’s unlawful benefit, it was open to him to explain the benefit he actually received.
[84] Because he has given no evidence, Mr McMillan has offered no yardstick by which I might adopt a different figure. As the Court of Appeal observed in Cheah, my role is confined to determining whether he has derived an unlawful benefit (he has), and whether he has rebutted the s 53 presumption (he has not).37 Ms Hogan rightly complains that, barring the discovery of a well-concealed fortune, the Commissioner seeks a sum that so exceeds what Mr McMillan could hope to repay that the PFO will become meaningless. But Mr McMillan is plainly not inclined to explain his finances under oath. That is his right, but it also means, when it comes to the level of the PFO, that he has made his own bed.
[85] Similarly, Mr McMillan effectively asks me to take judicial notice of the undue hardship that will follow if the PFO leaves him with a residual debt of around
$2.6 million. In the absence of evidence explaining the detail of his finances there is no foundation for a finding of undue hardship. If Mr McMillan really does have no additional assets, it will not matter whether his residual debt is $250,000 or
36 CPRA, s 6(3) provides that expenses or outgoings are to be disregarded when calculating the value of property or proceeds derived or acquired from significant criminal activity. See [27] above. See also R v Pedersen [1995] 2 NZLR 386 at 390 and 392.
37 Cheah, above n 15, at [47].
$2.6 million; he will have no prospect of paying it, and enforcement action by the Official Assignee will be pointless. In those circumstances, the PFO will, as Ms Hogan submits, represent an empty gesture. The order will only bite if Mr McMillan has managed to secrete assets the Police have not yet discovered.
[86] I agree with Ms Hogan that the prospect of the Official Assignee pursuing Mr McMillan for assets and income he acquires lawfully after his release is unpalatable. Ms Ferrier acknowledged that is not what the Commissioner is seeking to achieve, though she stopped short of promising the Official Assignee would confine future enforcement action to any concealed assets which later emerge.
[87] Nonetheless, I agree with Ms Ferrier that the operation of the High Court Rules, and in particular the need to obtain the Court’s leave to pursue any debt which is more than six years old, will provide Mr McMillan with a measure of protection. The application is designed to ensure no trace of Mr McMillan’s drug dealing wealth survives. It is not designed to prevent him from earning an honest living when he leaves prison. If the Official Assignee were to seek leave to enforce the order in that manner, he may struggle to obtain the Court’s leave, and may well attract criticism.
Conclusion
[88] CPRA is a deliberately unforgiving statute. It replaces the usual burden of proof with a series of presumptions respondents must actively rebut. If they do not, they risk orders of the kind the Act compels me to make in this case. Mr McMillan could, if he had wished, have tendered evidence to show the Commissioner has exaggerated the unlawful benefits he attributes to Mr McMillan’s operation. Despite engaging Ms Hogan’s expert representation, Mr McMillan has not been prepared to venture into the witness box with an account of the benefits he actually derived. It follows the statutory presumption prevails. Subject to my adjustment under s 47, to correct the Commissioner’s conversion from kilograms to ounces, I am obliged to make a PFO in the sum the Commissioner seeks.
Orders
[89] I make an assets forfeiture order over the cash and bank balances specified in paragraph 2 of the Commissioner’s application, totalling $168,099.81, plus accrued interest.
[90] Under s 47 of CPRA, I adjust the value of the sum sought in the Commissioner’s application to $2,926,328,38 and under s 53 I declare that sum to be the value of the unlawful benefit Mr McMillan derived. The maximum recoverable amount — the unlawful benefit less the AFO — is $2,758,228.19.
[91] I direct the Official Assignee to dispose, under s 83(1), of the remaining property seized from Mr McMillan after his arrest. That property is to be set out in full in the sealed order. For ease of reference it can be found in paragraph 9 of the Commissioner’s written submissions dated 3 October 2024. It encompasses all the non-cash assets seized from Mr McMillan, and includes the sums realised from the sale of the vehicles and the boat, along with the jewellery and other items of personal property specified in the application.
[92]Mr Mistry’s application for third party relief is dismissed.
Costs
[93] I will not add insult to injury by ordering Mr McMillan to pay the Commissioner’s costs. On the evidence currently available, the Crown has already recovered everything Mr McMillan possesses, and if further assets emerge they will be captured by the PFO.
[94] I agree the Commissioner is entitled to an award, on at least a 2B basis, to reflect his successful defence of Mr Mistry’s application. If the parties are unable to agree on the size of the award, I will be happy to receive memoranda. The Commissioner, as the successful party, is to file a memorandum of no longer than ten pages within 15 working days of delivery of this judgment. Mr Mistry will then have
38 365.791 ounces at $8,000 per ounce.
a further ten working days to file a memorandum in response, which likewise must not exceed ten pages.
Boldt J
Solicitors:
Luke Cunningham Clere, Wellington for Applicant
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